The Cost of Closeted Employees

Erika Karp vividly remembers the secrecy and subterfuge that colored every workday before she told her colleagues that she was a lesbian. “You have to devote a huge amount of psychic energy to being closeted — changing pronouns, switching names. I did that for years,” Karp recalls, all the while knowing that coming out could jeopardize her career in investment banking. “It was torture.”

According to a 2009 Human Rights Campaign report, more than half of LGBT employees are not “out” of the closet. Being in the closet is not just painful to individuals; it’s also an enormous talent drain for their employers. By not promoting and supporting an inclusive workplace, organizations whose workplace environments cause LGBTs to stay in the closet risk alienating and ultimately losing a critical tranche of talent. A new study by the Center for Work-Life Policy published in the July/August 2011 issue of Harvard Business Review quantifies just how high the cost is for both closeted LGBTs and their employers.

Nearly one-third (31%) of LGBTs surveyed in the study live double lives — out to their family or friends, but closeted on the job. Being forced to stay in the closet — or feeling penalized by a disapproving or hostile environment once they do come out — puts their career ambitions at war with their ability to put their whole self behind those ambitions. Like Karp, LGBT employees expend an enormous amount of energy simply keeping their stories straight, leaving less for focusing on the work they need to do to advance. Forced to lie about their private lives, they are excluded from the collegiate banter about weekend outings and personal interests that forges bonds in the workplace.

That’s a pity, not just for LBGTs but for their employers.

LGBTs’ ambition to excel is equal to that of their straight counterparts. Fully 88% of LGBT employees are willing to go the extra mile for employers, the same percentage as their straight counterparts, and 71% consider themselves very ambitious, compared with 73% of heterosexuals. Two-thirds of LGBTs are eager to be promoted, slightly higher than their straight counterparts. And although there are few out gay senior executives in corporate America today, LGBTs aspire to the executive suite almost as often as straight employees (52% vs. 56%).

Being out makes all the difference to a career. While the numbers of out and closeted LGBTs in middle management are roughly the same — 51% out, 49% not — their ongoing career paths diverge wildly. LGBT employees who stay on track and make it into senior management are much more likely to be out than closeted: 71% compared to 28% of their closeted counterparts.

The constant need to shield professional ambition from the personal revelations that can sabotage it may partly explain why closeted LGBT employees feel so much more stymied in their career paths than those who are out. More than half of those in the closet, or 52%, said they felt stalled in their careers, compared with 36% for out employees (and 49% of heterosexuals). Just under half are satisfied with their rate of advancement and promotion compared with two-thirds of those who are out. The gap widens even further for gay men especially: 54% of closeted gay men feel stalled vs. just 32% of out gay men. Only 34% of closeted gay men feel satisfied with their rate of promotion vs. 64% of those who are out.

The resulting flight risk is arguably one of the most significant for corporations. LGBTs frustrated with their current rate of promotion or advancement are three times more likely than those who are satisfied to plan to leave their companies within the next year. Compared to their out counterparts, closeted and isolated LGBT employees, burdened with the stress of daily secret-keeping, are 73% more likely to say they intend to leave their companies within the next three years than those who are out.

Few companies can afford losing their top talent. An LGBT talent drain will be inevitable unless employers change their work environment, warns University of San Francisco professor Nicole Raeburn, author of Inside Out: The Struggle for Lesbian, Gay and Bisexual Rights in the Workplace. “Now that we live in more inclusive times, where people know they can pick and choose employers, there’s a high likelihood of a costly brain-drain among LGBT top talent,” she says. “They will simply go elsewhere rather than work in a closeted environment.”

“From the time I came out, I became exponentially more productive and more energetic and more motivated,” recalls Erika Karp. “I just became better at everything I did.” Karp credits her decision to come out with much of her career success: Today, she is managing director and head of global sector research for UBS Investment Bank.

Sylvia Ann Hewlett is the founder and CEO of the Center for Talent Innovation and the founder of Hewlett Consulting Partners LLC.